FreeMarketDuck.com

Idaho's Weekly Journal of Local & National Commentary Week
2815

Wherein lies the
value of today's paper money?...
The problem: unconstitutional Federal Reserve plays Quantitative Economics
(as if econ is physics)
rather than Qualitative Economics, which is based upon individual rights and freedom
- Part 4(Sep 20, 2007)

If you want to be a
physicist, go study F=ma. If you want to be an economist, go study why
Snoop Dog sells more CDs than the New York Philharmonic.

I barely got past
the Introduction and three licks of my Belgian double chocolate cone --
freely purchased in a mutually agreed upon exchange of commodities (well, I
did use Federal Reserve Notes, please don't beat me) -- when, hesto presto,
at the end of Greenspan's Chapter One - City
Kid, pages 35-37, I found my answer.

On page 35
Greenspan writes:

"In 1951 I signed up for a course in mathematical
statistics, a technical discipline based on the notion that the inner
workings and interrelationships of a major economy can be investigated,
measured, modeled, and analyzed mathematically. Today this discipline is
called econometrics, but then the field was just an assemblage of general
concepts, too new to have a textbook or even a name."

Greenspan
continues:

"I
immediately saw the power of these new tools: if the economy could be
accurately modeled using empirical facts and math, then large-scale
forecasts could be derived mathematically, without the quasi-scientific
intuition employed by so many economic forecasters. I imagined how that
could be put to work. Most important, at age twenty-five I'd found a growing
field in which I could excel."

Greenspan
continues:

"My early training was to immerse myself in
extensive detail in the workings of some part of the world and infer from
that detail the way that segment of the world behaves. That is the process
I have applied throughout my career. ... The substance is from a far
simpler world, but the method of analysis is as current as any I would apply
today."

What Greenspan failed to
understand is that economics is a qualitative
science of human choice, not a quantitative science such as physics.
The economic theory of value and thus the creation of market prices -- is
derived by qualitative prioritizations of service rendered as determined by
free individuals in a free market. Gravity, acceleration, and the movement
of celestial bodies in the universe are not determined by human choice. The
two types of science, economics and physics, are both valid but their
underlying methodologies are inherently and fundamentally different. One
cannot morph the methods of physics into the methods of economics, period.

Therefore,
Greenspan, along with others who didn’t think it through, erroneously
assumed that the qualitative-ness of economics, which he apparently
disdained, could be made ‘more scientific’ – i.e., from his point of view,
more like physics -- by shoving historical market prices into mathematical
models and extrapolating future economic parameters much like physicists
calculate the future trajectory of a space ship. Unfortunately, the future
price of potatoes is not determined by historical prices of potatoes but
rather, once again, the concept of value and the creation of market prices
are the result of dynamically-changing, qualitative, subjective choices of
traders in a market. Thus, the entire basis for Alan Greenspan’s use of
econometric models to attempt to “manage” market economies is flawed at its
very foundation. While it might be OK for a physicist such as Albert
Einstein to miscalculate F=ma or E=mc2, since it doesn’t affect
my bank account or taxes, it is devastating to both my individual rights and
bank account when Congress abdicates its responsibility, illegally creates a
private central bank (the Federal Reserve), and Fed Chief Greenspan or his
successor, Ben Bernanke, manipulates the economy with bogus,
non-collateralized paper money and credit based upon the fallacies of
Econometric modeling.

Greenspan not only
failed to study, learn, or understand the theory of value and price
formation as taught by such Austrian free market economists as Prof Ludwig
von Mises or F.A. Hayek (the latter of whom won a Nobel Prize for his work
on price creation based upon the qualitative theory of value), Greenspan
also failed to connect Ayn Rand’s Objectivist philosophy (the metaphysical,
epistemological, and moral philosophical levels in which she stressed why
and how the individual must be free to choose in order to live in a rational
society) as a rational foundation for economics.

How did
Greenspan reconcile Rand’s moral philosophy of capitalism, the foundation of
which
is individual rights and mutually agreed upon exchanges in a free market,
with his Econometric modeling of society in which the individual’s
qualitative choices of value, and thus the creation of exchange ratios
(market prices), must necessarily be squashed (ultimately at the point of a
gun) in order to carry out the government’s (which means the Federal
Reserve’s) Econometric modeling of monetary manipulations such as regulating
prices, wages, interest rates, and issuing trillions of dollars of
non-collateralized paper (money and derivatives) after dumping the gold
standard? The truth is, Greenspan didn’t reconcile these contradictions
because he didn't realize they existed and, therefore, he couldn’t. Not
logically. Nobody could because contradictions, by definition, are
irreconcilable.

Thus, Greenspan
missed the intellectual connection between (1) Rand’s individual rights
philosophy and, therefore, is not a Libertarian by any means, and (2) the
qualitative theory of value in free market economics and, therefore, is not
a true economist. A government interventionist, yes; an economist, no.

In short, the major
problem in economics today is that we now have an unconstitutional Federal
Reserve playing Quantitative Economics (as if economics is physics) rather
than
Qualitative Economics, which is based upon individual rights, freedoms, and
choices. If you want to be a physicist, go study F=ma. If you want to be
an economist, go study why Snoop Dog sells more CDs than the New York
Philharmonic.

Why is the Federal
Reserve unconstitutional?

The Fed is
unconstitutional because the U.S. Constitution, Section 8. POWERS OF
CONGRESS Articles (5) and (6) state that (5)
“Congress has the power to coin money [not
print non-collateralized paper money],
regulate the value thereof, and of foreign coin, and fix the standard of
weights and measures [which refers to
setting weights and measures for U.S. coinage of which all the gold and
silver is now missing, having been replaced with base metals and fiat paper
currency],” and (6) “to provide for the punishment of counterfeiting
the securities and current coin of the United States.” Stop and
think about it. Our Founding Fathers were not stupid. Fractional reserve
banking (hello Federal Reserve) is essentially a form of counterfeiting our
original gold certificates since gold certificates were contractual
promissory notes between U.S. citizens and their government. In addition,
the U.S. Federal Reserve is also guilty of counterfeiting its own fiat
Federal Reserve Notes as it replicates them, changing only the serial
numbers, as non-collateralized fake contracts. Today, the U.S. has no real
Constitutionally-authorized money in general circulation -- except for
limited releases of gold and silver numismatic proof or BU (brilliant
uncirculated) sets for coin collectors. By what right did the U.S.
Congress abdicate its responsibility of regulating our gold and silver money
and authorize a private cartel of central bankers to replace redeemable U.S.
money with irredeemable paper? What's next? Will U.S. Senators
soon allow winos to walk in off the street and vote for Appropriations Bills
on the floor of Congress while they take vacations in Greece?

In addition, The
U.S. Constitution, Section 10 Article (1) states, “No
state shall … coin money; emit bills of credit;or make anything except gold and silver coin
[GOLD AND SILVER COIN, not non-collateralized paper money] a tender in payment of debts… ” So the
private Federal Reserve and its continual manipulation of the economy is not
only the cause of our current economic debacle – monetary meltdown and
resulting recession, it is also illegal, unconstitutional, and survives only
as what is called, “pretended law” until overturned by legal action. Good
luck.

In short, ex Fed
Chief Alan Greenspan and all Federal Reserve members are neither true
economists nor philosophical intellectuals for freedom. Instead, they are
actually carrying out the true definition of economic fascism – the
government controlling the economy with tons and tons of rules and
regulations – creating a huge redistributive welfare state on a grandiose
scale. Greenspan, Bernanke, and all government central bankers who think of
themselves as “Quantitative Economists” can best be characterized as Historical Price Modeling Interventionists for
Government Bureaucrats and Special Interest Groups, which is
exactly what has been going on for decades and has now brought us to our
current economic debacle: an impending monetary meltdown and recession.

Supporters of
Interventionist Greenspan say, “Wow, what a
genius. Look at how the Econometricians at the Federal Reserve have saved
America and kept us on an even economic keel.” FM Duck counters
with, “Wowsie-bowsie, yourself, you idiots.
Think what a true free market WOULD HAVE ACCOMPLISHED if it had not been
mangled by Fed interventionist policies for the last 75 years, AND look at
how the investment bankers and affiliates have GREATLY enriched themselves
not through an objective free market but rather through
government-sanctioned monetary manipulations by which they have cleverly
transferred the wealth of other individuals to themselves.”

From an individual rights and economics
point of view, we now live in a fascist non-market instead of a limited
government free market. Those who think we can live in a mixture of both, a
mixed economy, have not done their homework. Remember, valuation of
exchange and thus price creation, are qualitatively determined by free
people freely trading. Destroy that mechanism and you destroy all market
prices, the use of supply and demand, and eventually the entire market.
Mixed economies are delusions of Quantitative Econometricians and
battlegrounds for future dictators. One cannot simply inject capitalism
into communism or arsenic into wine or become half pregnant. Either you is,
or you ain’t.

Did I bother to
finish reading Greenspan’s book? Naw. Why bother. When you know the
philosophical premises, you know the outcome. I did, however, finish my
Belgian double chocolate ice cream cone without spilling one drop on Mr.
Greenspan’s 500 pages of where I grew up, how I
played the clarinet, why I like ex President Gerald Ford, why the War in
Iraq is all about oil, and how – this is rich – the Bush Presidents coulda, shoulda, woulda made
America great if only they had followed my
Mathematical Model of Suppressing Individual Rights
instead of their Whatever Model of
Suppressing Individual Rights.

Stay tuned for Part
5 in which we discuss: dum-da-dum, The Solution to this damn mess. – FM
Duck